Fees and Compensation
As compensation for its services, Churchill will receive an annual management fee (the “Management Fee”)
based on a fixed rate or percentage of a Client’s committed capital or invested capital. Typically, the
Management Fee charged to Clients will equal the sum of up to two percent of invested capital and one percent
of committed and uninvested capital, payable on a quarterly basis. The Firm and/or certain of its affiliates will
also receive performance-based compensation (the “Performance Allocation”) based on realized gains from
investments, subject to agreed-upon high watermarks.
SMAs will be subject to an annual asset based fee which will typically be prorated and charged on a monthly or
quarterly basis, in advance or arrears, as negotiated on a case by case basis with the individual investor.
Depending on the relationship, this fee may be separate and in addition to or inclusive of other fees charged
by the Firm which may include a portion of any origination and/or profit participation fees due on the
underlying mortgage loan, and a performance based fee calculated by reference to a targeted rate of return on
the underlying loan.
The Firm receives the Management Fee on a monthly or quarterly basis. The calculation of the Management
Fee is derived from the most recent valuation of the portfolio, as determined by the Firm, general partner or
other responsible party. If applicable, a performance allocation is typically deducted directly from a Fund’s
assets as investments realize gains and not on a pre-determined schedule.
Similarly, as described in the applicable Governing Documents, Churchill or an affiliate will under certain
circumstances be entitled to retain advance fees, servicing fees, extension fees and/or modification fees received
from a counterparty with respect to any Client investment or prospective investment as reimbursement or
compensation for due diligence, underwriting or servicing of such investment or prospective investment.
Each of Churchill and an SMA generally bears its own expenses. To the extent possible, third-party expenses
incurred in connection with consummated transactions may be borne by the respective counterparty, including
borrowers. Churchill’s out-of-pocket expenses are generally reimbursed by the applicable counterparty through
the provision of a good faith deposit; where there are unreimbursed costs associated with a deal presented to
an SMA, those costs are borne by Churchill.
The Funds may bear all costs and expenses related to the Fund’s operations (whether conducted directly or
indirectly through its subsidiaries), including, without limitation (a) legal expenses including reasonable
attorney’s fees), (b) the Management Fee and all fees and expenses of custodians, transfer agents, trustees, third-
party administrators (including fees and expenses associated with the Fund’s third-party administrator and
administration, tracking or reporting software, if any), paying agents, corporate agents, auditors, appraisers, tax
advisors, consulting (including consulting and retainer fees and other compensation paid to consultants
performing investment initiatives and other similar consultants) and similar service providers, (c) expenses
associated with making distributions or redemptions (including distributions of marketable securities), (d)
accounting expenses, including expenses associated with auditor the preparation of the financial statements and
tax returns and the filing of various tax withholding forms and treaty forms on behalf of the Fund, its
subsidiaries or any investor therein (including without limitation, the preparation, distribution or filing of Fund-
related or investment-related financial statements or other reports, (e) costs and expenses related to
indebtedness of, or guarantees made by, the Fund, the Manager, the General Partner or any Limited Partner
that is an affiliate of the General Partner on behalf of the Fund (including any credit facility, letter of credit or
similar credit support), including repayment of principal and interest with respect thereto, or seeking to put in
place any such indebtedness or guarantee as well as financing, commitment, origination and similar fees and
expenses, (f) costs and expenses related to the preparation and distribution of reports, including the cost of
third party consultants, accountants or advisors with respect to the preparation of the calculations set forth
therein, (g) all expenses associated with internal valuations of the Fund’s and its subsidiaries’ assets, (h) costs
related to risk management services and premiums and fees for insurance to benefit, directly or indirectly, the
Fund, its subsidiaries, the Advisory Committee, the Manager, the General Partner and affiliates of the General
Partner with respect to liabilities to any person in connection with the affairs of the Fund and its subsidiaries
and for directors’ and officers’ liability insurance or other similar insurance policies, including errors and
omissions insurance and financial institution bond insurance (including, without limitation, directors and
officers liability, errors and omissions liability, crime coverage and general partnership liability premiums and
other insurance (including cyber insurance) and regulatory expenses, including any costs and expenses related
to any retention or deductibles), (i) costs and expenses related to investor communications and meetings, (j)
costs of actual or threatened litigation, arbitration, mediation or other dispute resolution proceeding involving
the Fund or any of its subsidiaries or its investments (each a “Portfolio Investment”) or other matters that are
the subject of any exculpated person’s indemnification rights under the Governing Documents including,
without limitation, advancing fees, costs and expenses incurred by any such exculpated person, (k) expenses
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